Abstract
This research aims to apply the value-added intellectual coefficient (VAIC) model to test the impact of intellectual capital (IC) on market value of the Jordanian industrial firms. The research increases the awareness of the need for firms of all sizes to communicate and value their business beyond capturing numbers alone. The sample for this study is 73 Jordanian manufacturing shareholders companies during the period 2005–2017. The sample employed consists of 648 firm-year observations. Market value is measured using the market capitalization over the total assets. Valuation approaches are a challenging area created to enable the stakeholders, or outside parties, to put an economic value on a firm.The IC and its components: capital employed (CEE), structural capital (SCE), and human capital (HCE) of industrial firms have been analyzed, and their impact on market value has been estimated using regression models. The results show that there is no relationship between IC and the market value; HCE is associated with the market value, and SCE and CEE are not associated with the market value. This could be explained by the increase in employees’ training, as a regular training program is an essential factor in managers’ and employees’ performance. Practically, investors have a positive view of a firm that has higher employee expenditure than its investment in physical capital. Future research should be made on the empirical analysis of other sectors to determine whether different results and explanations can be obtained.
Highlights
Valuation frameworks and performance management have traditionally concentrated almost exclusively on financial results and have paid little attention to assessing the knowledge.Intellectual property is intangible assets, such as trademarks, copyrights, and patents included in financial statements
This research aims to apply the value-added intellectual coefficient (VAIC) model to test the impact of intellectual capital (IC) on market value of the Jordanian industrial firms
The results show that there is no relationship between IC and the market value; Human capital efficiency (HCE) is associated with the market value, and structural capital efficiency (SCE) and capital employed (CEE) are not associated with the market value
Summary
Valuation frameworks and performance management have traditionally concentrated almost exclusively on financial results and have paid little attention to assessing the knowledge. Intellectual property is intangible assets, such as trademarks, copyrights, and patents included in financial statements. The tangible assets (money, land, buildings, machinery, equipment) and other assets of the balance sheet are sufficiently less in their value than the intangible assets which are not recorded, including patents, copyright, IT, databases and software, as well as skills, abilities, experiences, cultures, and loyalties. The current technological and information revolution resulted from knowledge-based economic changes and concepts.
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